Car Fuel Efficiency Toughened

It has been a long time since a Canadian government tried to force the auto industry to improve fuel efficiency. The energy crisis scares of the 1970s were still fresh memories when Pierre Trudeau's Liberals passed the Motor Vehicle Fuel Consumption Standards Act in 1982.

It has been a long time since a Canadian government tried to force the auto industry to improve fuel efficiency. The energy crisis scares of the 1970s were still fresh memories when Pierre Trudeau's Liberals passed the Motor Vehicle Fuel Consumption Standards Act in 1982. The law would have given Ottawa the power to set minimum kilometres-per-litre rules, and to fine automakers who failed to meet them. But although Parliament passed the act, it was never proclaimed into law. Instead, after intense lobbying by the powerful car and truck companies, the Trudeau government agreed to let the industry meet targets voluntarily. Since then, the federal approach has been to dutifully - critics would say meekly - follow the U.S. lead on fuel efficiency standards.

At least up until now. In what could turn out to be a bold reversal of policy, Ottawa is again making noises about going it alone. Senior federal officials say they will begin negotiations in September with the big automakers with the aim of arriving at new home-grown standards next year. And the feds' opening bargaining position is ambitious enough to have the industry's lobbyists very jumpy: a 25-per-cent improvement in fuel economy by 2010 for both passenger cars and the light trucks category, which includes popular minivans, sport utility vehicles and pickups. Peter Reilly-Roe, assistant director of the Transportation Energy Use Division of Natural Resources Canada, admits that target is open to negotiation. "That's certainly what we'd like to get," he says.

Not if the automakers have their way. Not even close. The industry claims any separate Canadian standards would badly hurt manufacturing efficiency by fragmenting the North American market. The manufacturing process would become more complex - and more costly - if special Canadian requirements had to be taken into account. Mark Nantais, president of the Canadian Motor Vehicle Manufacturers' Association, warns that Canadian car buyers would bear the burden of the policy: small production runs of models designed to meet the new standards might cost more, and the available selection of bigger, less fuel-efficient vehicles might shrink. "If they are serious about pursuing unique requirements for Canada, the entire automobile industry is very concerned," he says. "What that means in terms of North America is that they are starting to dismantle the integrated industry." The implications go beyond the issues for car buyers that Nantais stresses to the prospect of lost manufacturing jobs - a politically explosive prospect for the big Liberal Ontario caucus.

But Nantais doubts the government will push the file that far. His view is shared by some of the most prominent voices on the other side of the debate - environmental activists who want the Liberals to get tough. "I don't have much confidence," says Peter Tabuns, executive director of Greenpeace Canada, which released a major study making the case for more stringent vehicle emissions regulations earlier this year. "The federal government's credibility is very low."

Just how much political muscle gets thrown behind the push for new standards will depend largely on the cluster of cabinet ministers involved. Natural Resources Minister Herb Dhaliwal's department is spearheading the negotiations, but two other key Liberals might turn out to be even more important. Environment Minister David Anderson badly needs a daring new departure to inject some life into his struggle to devise a mix of policies to cut Canada's greenhouse gas emissions, especially if Prime Minister Jean Chrétien decides to ratify the Kyoto climate change treaty this fall. Anderson's enthusiasm for cars that sip rather than swill gasoline is well known: he eschews the usual spacious ministerial sedan in favour of Toyota's petite Prius. But Transport Minister David Collenette, as a powerful Ontario voice at the cabinet table, will be under pressure from his home province's auto sector to fight back.

Ironically, it is developments in the U.S. that have revived the possibility of a Canadian code for fuel economy. According to Reilly-Roe, Ottawa remained more than willing to continue to harmonize with U.S. standards until it became clear a few months ago that Washington, with a one-time Texas oilman in the White House, was abandoning any thought of stricter fuel economy measures this year. In March, the U.S. Senate voted not to set specific new targets for the auto industry as part of a wider energy plan. That plan is still before Congress, but there is next to no chance of any last-minute reintroduction of significant fuel efficiency measures. "It isn't clear exactly what they are going to do, but it isn't going to be much," Reilly-Roe says. "We're going to try to get a lot more."

If Canadian policy-makers are feeling bolder, they may be taking their lead from that perennial trend-setter, California. On July 2, California's state assembly passed a law that will dramatically limit auto emissions of carbon dioxide, the main gas that scientists say is building up in the atmosphere and causing global warming. The automakers are being given lots of time to adjust; the tighter restrictions won't apply to new models of cars and trucks until 2009. Still, the industry mounted a ferocious campaign against the California law, including an advertisement that claimed, "Supporters of this legislation just don't want you driving SUVs, pickups and minivans. If they really had their way, they wouldn't let you drive at all." Having lost the battle at the political level, automakers are now vowing to launch a court challenge arguing the state has overstepped its jurisdiction.

California's trail-blazing is top of mind for advocates of a similar Canadian approach. "It starts in California and Canada and rolls out from there," proposes Ken Ogilvie, executive director of Pollution Probe. "We're a big enough market, similar to California," says Elly Meister, vice-president of public affairs for the Canadian Automobile Association, which supports Natural Resources' fuel efficiency improvement proposal. The CAA doesn't accept the auto industry's case that a Canada-only regulation, with vehicles outfitted especially for this market, would end up costing Canadian car buyers more. Meister says flatly, "I've never bought that argument."

Just how difficult it would be to achieve one-quarter better fuel economy by 2010 is a hotly debated subject. The target would apply to the average efficiency of vehicles in two categories. Under the current guidelines, all cars sold by each manufacturer must average no more than 8.6 litres/100 km, and all light trucks, including SUVs and minivans, no more than 11.4 litres/100 km. A 25-per-cent improvement would drop those averages to 6.5 litres/100 km for cars and 8.6 litres/100 km for the light truck group. Manufacturers might hit the targets through a mix of new technology and changing marketing strategies to boost sales of smaller vehicles. Because a wide range of vehicles are lumped together to calculate the average, no fuel-efficiency minimum would be imposed on specific models. There could still be muscle-bound 4x4s and fast cars for drivers with Indy fantasies - as long as enough of the new models put into showrooms did their bit to lower the overall fuel-burning average.

Nantais argues there's no easy way for Canada to take the lead, and pleads for patience. While the decision by the U.S. Congress not to proceed with new standards may be frustrating, he says, it's only a matter of time before the issue makes its way back onto Washington's agenda. The question is whether Ottawa will wait to see what happens whenever U.S. lawmakers next tackle the issue, or, after two decades in neutral, finally gears up a made-in-Canada policy.

SIPPING AND SWILLING

The cars and light trucks sold in Canada have a wide range of fuel efficiencies. Most of the Top 10 selling models in 2002 fall somewhere in between. How they rank from the most to the least fuel-efficient for both city and highway driving: